UK-based specialist staffing firm Empresaria reported H1 net fee income of £29.7 million, down 10% in constant currency and 9% on a reported basis.

As highlighted in its previous trading update on 23 May 2023, the softening of demand and slowing of hiring decisions seen across the group's businesses in the second half of 2022 have continued into 2023. The US was particularly impacted by challenging market conditions, the group noted.

At the same time, the greatest net fee income impact has been on permanent recruitment which was down 24% year-on-year with temporary and contract down 8%.

The group’s Offshore Services operation, where there is a 28% non-controlling interest, reported year-on-year net fee income growth of 15% against the first half of 2022.

Empresaria said sales to UK clients, which primarily support the healthcare sector, have continued to grow strongly, however sales to its US clients, the majority of which support the IT sector, have continued to be impacted by the fall in client demand seen in the second half of 2022.  

Rhona Driggs, CEO of Empresaria, said, "We continue to face challenging market conditions which developed through the second half of 2022 and remained throughout the first half of 2023.  We have not seen the anticipated signs of sustained improvement as client confidence remains low and candidates continue to be reluctant to move in the current environment.  With the ongoing macro-economic uncertainty, we now expect these factors to continue to have an adverse impact on the group's profits in the second half of 2023.”

The company said it has already implemented a number of targeted measures to manage its cost base, including reductions in headcount, and it continues to keep costs under review.  However, given the ongoing trading conditions, which it does not expect to improve significantly in the second half of the year, full year adjusted profit before tax is now expected to be approximately £5 million.

“We have taken action on our cost base and will continue to maintain tight control over costs while ensuring that we are able to maximise opportunities as and when market confidence returns,” Driggs added. “While we are disappointed with these results, we are continuing to execute on our strategic initiatives and are confident in the medium and longer-term prospects of the group."

News of the profit warning sent shares plummeting today. Empresaria Group shares last traded at £39.12, down 24.77% on the day and 20.16% above its 52-week low of £49.00, set on 1 June 2023. The company has a market cap of £25.92 million.